Imagine you are a financial advisor counseling a client on portfolio diversification. The client, Mr. Smith, is a 45-year-old professional with moderate risk tolerance. He has $500,000 to invest and is considering two options: Option A - investing in a mix of technology stocks with higher expected returns and Option B - investing in a diversified portfolio of bonds and blue-chip stocks for stability. Explain the potential risks and returns associated with each option, considering Mr. Smith's investment goals and risk profile.